Shri Hasmukh Dhudalal Mehta, Surat V. The Income tax Officer,Ward-9(2), Surat

ITA 2223/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6119 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 28-05-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 11-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAXMI
• Keywords: Unexplained cash credit; Opportunity of being heard; Set aside
• Section: 271(1)(c); 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : A HMEDABAD CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON'BLE SH RI D.C. AGRAWAL, A.M.) I.T.A. NO. 2223/AHD./2008 ASSESSMENT YEAR : 2004-2005 SHRI HASMUKH D. MEHTA, SURAT -VS.- INCOME TAX OFFICER, WARD-9(2), SURAT (PAN : ABEPM 9567 H) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAMESH MALPANI RESPONDENT BY : SMT. JYOTI LAXMI, SR. D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 17.03.2008 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-V, SURAT CONFIR MING THE PENALTY OF RS.1,45,573/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2004-05. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S AN INDIVIDUAL ENGAGED IN THE BUSINESS OF DIAMOND CUTTING AND POLISHING ON JOB WORK BASIS IN HIS PROPRIETARY CONCERN M/S. SOHAM DIAMOND AND TRADING OF DIAMONDS IN HIS ANOTHER PROP RIETARY CONCERN M/S. H.M. IMPEX. FOR THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME AT RS.73,037/- THE ASSESSING OFFICER FRAMED THE ASSESS MENT UNDER SECTION 143(3) ON 27.12.2006 ON A TOTAL INCOME OF RS.5,35,226/-. IN THIS ASSESSMENT ORDER, THE ASSESSING OFFICER MADE THE ADDITION OF RS.4,80,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT AND DISALLOWED RS.91,910/- BEING LABOUR CHARGES PAID TO SHRI ATUL M. PATEL. SU BSEQUENTLY, IN RESPECT OF BOTH THESE ADDITIONS, THE ASSESSING OFFICER LEVIED THE PENALTY UNDER SECT ION 271(1)(C) AMOUNTING TO RS.1,45,573/- BEING 100% OF TAX SOUGHT TO BE EVADED ON CONCEALED INCOME OF RS.5,71,910/-. 3. IN APPEAL AGAINST THE ORDER OF ASSESSING OFFICER LEVYING PENALTY UNDER SECTION 271(1)(C), THE LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER, UPHELD THE ACTION 2 ITA NO. 2223/AHD/2008 OF ASSESSING OFFICER OBSERVING THAT NO ONE ATTENDED NOR ANY APPLICATION FOR ADJOURNMENT WAS FILED BY THE ASSESSEE ON THE DATE FIXED FOR HEARING I.E. 29.01.2008. AGGRIEVED BY THE ORDER OF LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF A SSESSEE SHRI RAMESH MALPANI, LD. COUNSEL APPEARED AND CONTENDED THAT PENALTY UNDER SECTION 2 71(1)(C) IN RESPECT OF ADDITION MADE UNDER SECTION 68 OF THE ACT AMOUNTING TO RS.4,80,000/- IS NOT LEVIABLE IN VIEW OF THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS.- CIT REPORTED IN [2001] 249 ITR 125 (GUJ.). IN RESPECT OF DISALLOWANCE OF RS.91 ,910/- BEING LABOUR CHARGES PAID TO SHRI ATUL M. PATEL, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IN VIEW OF THE LATEST JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF TRF LIMITED V S.- CIT REPORTED IN 323 ITR PAGE 397 (SC), PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIAB LE. HE ACCORDINGLY CONTENDED THAT PENALTY OF RS.1,45,573/- LEVIED BY THE ASSESSING OFFICER IN RE SPECT OF AFORESAID TWO ADDITIONS/ DISALLOWANCES AND CONFIRMED BY THE LD. LEARNED COMM ISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER BE CANCELLED. AS AGAINST THIS, SMT. JYOTI LAXMI, LD. SR. D.R. APPEARING ON BEHALF OF THE REVENUE CONTENDED THAT BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS NOT FURNISHED ANY REPLY IN RESPONSE TO SHOW-CAUSE NOTICE ISSUED BY TH E ASSESSING OFFICER BEFORE LEVYING PENALTY UNDER SECTION 271(1)(C). APART FROM THIS, EVEN BEFO RE THE LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) NEITHER ANYBODY APPEARED NOR ANY APPLI CATION FOR ADJOURNMENT WAS RECEIVED ON THE DATE FIXED FOR HEARING, I.E. ON 29.01.2008, THEREFO RE, ON THIS GROUND ALONE, THE LD. D.R. SUGGESTED THAT THE ORDER OF LD. LEARNED COMMISSIONER OF INCOM E TAX(APPEALS) BE UPHELD. 5. IN HIS REJOINDER, THE LD. COUNSEL OF THE ASSESSE E SUBMITTED THAT THE LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS NOT GIVEN P ROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ONLY ONE NOTICE OF HEARING WAS ISSUED, WH ICH WAS HANDED OVER BY THE ASSESSEE TO HIS COUNSEL BUT HE HAS NOT ATTENDED THE SAME. HE CONTEN DED THAT BEFORE PASSING EX-PARTE ORDER THE LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OUGHT T O HAVE GIVEN ONE MORE OPPORTUNITY TO THE ASSESSEE TO REPRESENT HIS CASE. SINCE THIS WAS NOT DONE, HE SUGGESTED THAT THE ORDER OF LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE SET ASIDE AND BE DIRECTED TO DECIDE THE APPEAL OF THE ASSESSEE AFRESH AFTER GIVING ONE MORE OPPORT UNITY TO THE ASSESSEE IN ACCORDANCE WITH LAW. 3 ITA NO. 2223/AHD/2008 6. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. PRIMA FACIE, IT APPEARS THAT THE LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ISSUED ONLY ONE NOTICE FIXING THE DATE OF HEARING ON 29.01 .2008. EVEN OTHERWISE, THE LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OUGHT TO HAVE P ASSED A REASONED ORDER AS HELD BY THE ITAT, C BENCH, AHMEDABAD, IN THE CASE OF GUJARAT THEMIS BIOSYN LTD. VS.- JCIT REPORTED IN [2000] 74 ITD 339 (AHD.). IN THIS DECISION, THE ITA T, C BENCH, AHMEDABAD, HELD THAT PROVISIONS OF SECTION 250(6) ARE MANDATORY AND IT I S OBLIGATORY FOR COMMISSIONER (APPEALS) TO PASS A SPEAKING ORDER STATING POINTS RAISED IN APPE AL, HIS DECISION THEREON AND REASONS FOR SUCH DECISION. ADMITTEDLY, IN THE IMPUGNED ORDER, THE LD . LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE PENALTY LEVIED BY THE AS SESSING OFFICER ON THE GROUND THAT IT IS NOT KNOWN WHETHER ANY APPEAL IS FILED BY THE ASSESSEE A GAINST QUANTUM ADDITION. IN OUR OPINION, THIS IS NOT IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION 250(6) OF THE INCOME TAX ACT, 1961. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER O F LD. CIT(A) AND DIRECT HIM TO DECIDE THE APPEAL OF THE ASSESSEE AFRESH AFTER GIVING OPPORTUN ITY OF BEING HEARD TO BOTH THE SIDES. 7. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 04.06.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 04 / 06 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.